What type of business arrangement involves two or more individuals sharing ownership and profits?

The scenario described pertains to a partnership, which is a business arrangement where two or more individuals come together to share ownership, responsibilities, and profits. In a partnership, each partner typically contributes resources—these can include capital, labor, or expertise—and all partners have the authority to participate in the management of the business, unless otherwise specified in a partnership agreement.

Partnerships inherently involve collaboration, meaning that profits (and losses) are distributed among the partners as per the agreed terms, reflecting the shared nature of the venture. This distinguishes partnerships from other business entities. For example, a corporation is a separate legal entity that can own property, enter contracts, and be held liable, while the ownership is typically divided among shareholders. A sole proprietorship is owned and run by one individual, who keeps all profits but also bears all liabilities. A limited liability company, or LLC, combines features from partnerships and corporations, providing certain protections to owners while allowing for profit sharing, but it does not operate under the same premise of shared ownership and direct partnership dynamics.

Thus, a partnership is characterized specifically by the collaborative effort of multiple owners, sharing both the operational responsibilities and the financial outcomes of their business venture.